Q4 Australian Biotech market wrap

Q4 at a glance

As 2017 comes to a close, we have seen the familiar recipe of that macro-economic Christmas cake we have come to know all too well, baking away. A base of stubbornly low inflation, a dash of unemployment, a hint of economic growth and finally a hefty measure of geo-political uncertainty to give it that little kick. While the world continues to be in the pursuit of yield in a low yield reality, we turn our focus to investment themes that produce just that.

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Impressive performance from Australian life science sector in 2017

The Australian life science sector this year has had one of its best performances in recent history – the S&P/ASX300 Pharmaceuticals & Biotech (Bloomberg:AS52PHRM) index rallying an impressive 5.7% quarter-to-date (an eye watering 35.5% across the 12 months). For comparison, the ASX200 rallied 7% in the same period (5.8% since January 1st).

Unlisted and early stage biotech yielding positive results

Not only is the listed space performing well, unlisted and early stage biotech also received attention in the form of much needed and timely investment commitments. The quarter saw traction with the Federal Government’s $1.1B National Innovation and Science Agenda – established to commercialise promising discoveries and early stage innovations – with two funds making headlines: The Biomedical Translation Fund, a $500m war chest from a collaboration of public and private funding has confirmed three investments in the quarter totaling $13.3m into early stage medical technologies. The second fund, the CSIRO Innovation Fund at $200m, provides investments in the development of early stage technology from the public research sector to help improve the translation of research into commercial outcomes. The iQ Group Global’s own early stage venture capital fund, Series 8-I, received unconditional approval from Innovation Australia entitling investors to tax exemptions on capital gains.

2018 presents risks but potential for significant returns 

What this all says is that momentum is building within the sector. With Australian research into the life science and biotechnology space at the forefront of innovation and disruption, 2018 will no doubt potentially hold significant risks – as the future always does – importantly though, it will also present the possibility for significant returns.

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Harry Simeonidis, Jimena Hurtado and Dr. George Syrmalis – part of the GBSG Management Team